ECB paper examines firms’ response to carbon trading

Policy-makers should use subsidies for green innovation alongside carbon credits, researchers argue

European Central Bank
The European Central Bank

A working paper published by the European Central Bank investigates how policy-makers should encourage firms to reduce their carbon emissions.

In Dynamic carbon emission management, Maria Cecilia Bustamante and Francesca Zucchi present a model examining how firms will respond to policies. The model examines how firms should manage production, green investment and trading in carbon credits. 

The authors say empirical research provides evidence that the effects of climate regulation are

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